Occupied Jerusalem: Lawyers representing Ehud Olmert on Thursday cross-examined a key witness in a corruption probe against the Israeli prime minister, hoping to discredit allegations that Olmert illicitly accepted cash-stuffed envelopes from an American businessman to help fund a luxurious lifestyle.

The businessman, 75-year-old Morris "Moshe" Talansky, appeared nervous in an Israeli court room, drumming his fingers on the table, fidgeting with a plastic cup and at one point asking for a break. He insisted he told the truth in previous testimony.

The questioning of Talansky is seen in Israel as perhaps Olmert's last chance of political survival. Talansky's testimony in May seriously damaged Olmert's credibility among Israelis.

Olmert has consistently denied any wrongdoing. He has said he will resign if he is indicted.


In a new blow to Olmert's efforts to clear his name, a key member of his defense team resigned this week after he was criticised for suggesting that Olmert accept a plea bargain and resign, rather than face possible prison time, the Haaretz newspaper reported on Thursday.

Talansky said Olmert accepted hundreds of thousands of dollars in cash during his tenure as Jerusalem mayor and as a Cabinet minister before he was elected prime minister in 2006.

The money went to feed a penchant for expensive cigars, first-class travel and luxury hotels, Talansky charged. His cross-examination is expected to take five days.

Police suspect the money was meant as bribes, although Talansky insisted he never got anything in return, or illegal campaign financing.